After a near-death experience in 2008, Sparton refocused on higher-margin manufacturing in the defense, medical-device and electronics segments. Its shares could rally 50% as earnings increase.

Sparton, a small manufacturer of electromechanical devices, is well on its way to reinventing itself after a period of operating losses and a near-death experience in 2008-09.

The turnaround has been piloted from the start by a new management team, led by CEO Carey Wood, who slashed costs and terminated unprofitable contracts. Management also has shifted its focus since 2009 from low-margin contract manufacturing, such as...